transcare - influence of truck tolls on the modal split in cargo traffic

7/29/2019 TransCare - Influence of truck tolls on the modal split in cargo traffic

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Influence of truck-tolls on the

modal split in cargo traffic

Author:

TransCare AG

Kreuzberger Ring 62D- 65205 Wiesbaden

www.transcare.de

Created:

Wiesbaden, March 2006
http://www.transcare.de/


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Editor:

The Project-Team:

Ralf Jahncke

Undine Barckhausen

Katrin Zima


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Influence of truck tolls on the modal split in cargo traffic

TransCare AG i

Content

1 Introduction...............................................................................................5

2 Analysis Status Quo Tolls in Europe ................................................11

2.1

Road Tolls in Germany.............................................................................12

2.2 Road Tolls in France................................................................................13

2.3 Road Tolls in Switzerland.........................................................................14

2.4 EU 25 .......................................................................................................17

2.5 Cost Efficiency and Transport Political Conditions...................................18

3 Modal Shift Potential Road-Rail ............................................................21

3.1 Total Volume of Goods Transported by Road (by Type of Goods) .......... 22

3.2 Rail Feasible Volume of Goods Transported by Road.............................22

3.3 Rail Affine Volume of Goods Transported by Road .................................23

3.4 Modal Shift-Potentials ..............................................................................24


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3.5 Interim-Result .........................................................................................25

4

Determination ofModal-Shift-Capable Toll Amount........................26

4.1 Infrastructure fees ....................................................................................26

4.2 Price Sensitivity ........................................................................................27

5 Effect on national economies................................................................29

5.1 Increase of Operational Incosts through Truck Tolls................................29

5.2 Economical Effects ...................................................................................30

6 Result and Summary..............................................................................32


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List of tables and figures

Image 1: Modal Split in Cargo Traffic 1950 2009 in Germany [tkm].........................5

Image 2: Price Development Road-Rail 1975 -2005...................................................6

Image 3: Level of liberalisation of the rail market in Europe .......................................8

Image 4: Modal Split in Germany [Bill. tkm] ..............................................................12

Image 5: Modal Split in France [Bill. tkm]..................................................................14

Image 6: Modal Split in Switzerland [Bill. tkm]...........................................................15

Image 7: Modal Split [t km, %], Note: Road - t km by vehicles registered in thecountry......................................................................................................17

Image 8: EU 25 Modal Split [%] ................................................................................18

Image 9: Measures and Ranking ..............................................................................20

Image 10: Procedure to evaluation of relocatable potentialities of the roadtransport. ..................................................................................................21

Image 11: Modal Shift Volume Road-Rail .................................................................23

Image 12: Modal Shift-Potential for the Rail..............................................................25

Image 13: Infrastructure Fees Road vs. Combined Traffic........................................26

Image 14: Price-Sensitivity of goods.........................................................................27

Image 15: Effective raise of processing costs...........................................................29

Image 16: Increase of operational incosts ................................................................30

Image 17: Operating Margin vs. Increase of Operational Incosts .............................31


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Sources

Source 1: DIW, ifo, Statistisches Bundesamt, Prognos/ProgTrans, BVU

Illustration TransCare

Source 2: TransCare AG


Source 4: Kraftfahrt-Bundesamt, Statistisches Bundesamt und BVU Prognose,Progtrans, Illustration TransCare

Source 5: EU-Commission Directorate-General for Energy and Transport,Illustration TransCare

Source 6: LITRA, Switzerland 2005, Illustration TransCare

Source 7: EU-Commission Directorate-General for Energy and Transport,Presentation TransCare

Source 8: EU-Commission Directorate-General for Energy and Transport,Illustration TransCare

Source 9: TransCare (1995-97)








Source 17: Institut der Deutschen Wirtschaft (IW), Kln, Darstellung TransCare


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1 Introduction

The liberalisation of the European road transport of goods was already decided in

the mid eighties. By 1993 total freedom of services in EU-traffic was achieved, EU-

cabotage was released in 1998. Today cabotage-restrictions only exist for the new

member states within the scope of the EU eastward expansion. However today

trucks from Poland are able to take up their consignment in Germany and carry it on

to France. European truck fleets with different locations are able to administrate an

EU-wide organisation of transportation, without having any restrictions on the na-

tional level or regulatory obstructions. Simultaneously the European Common Mar-

ket generated an enormous increase in efficiency, e.g. through removal of border

controls, which led to an increase in road freight transportation.

Since the rail sector did not go through the process of intra-modal competition with

the corresponding increase in efficiency, which should have been an effect of the

liberalisation that did not take place - the road could win clear market shares in rela-

tion to the rail freight traffic. Whereas 1970 rail and road carried a high volume of

goods within the Central Europe (ca. 40% market share), today rail transport ac-

counts for only 15 % while road transport has grown to approximately 70%.

Modal Split in Cargo Traffic 1950-2009 in tkm

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1950

1957

1964

1971

1978

1985

1992

1999

2006

tkm-ShareinP

ercent

Truck Rail Inland Waterways Pipeline

Image 1: Modal Split in Cargo Traffic 1950 2009 in Germany [tkm]Source 1: DIW, ifo, Statistisches Bundesamt, Prognos/ProgTrans, BVU Illustration TransCare


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In the course of liberalisation drastically falling road tolls helped prospering national

economies in their development possibilities and also considerably supported the

internationalisation, particularly within the consumer goods sector. Thus European

goods of different origins had the same price level for the consumers.

As compared to road, rail was in fact not liberalised. Different national activities were

taking place for the liberalisation of rail, which started a careful competition espe-

cially in Scandinavia, Germany, Holland, Austria and Switzerland. A liberalisation, as

it is already existing on the road for more than one decade, has however not been

achieved so far. This can be clearly seen on the graphic below where the fees of

road transportation decreased markedly in the last 20 years, compared to rail trafficwhere fees slightly increased in the same period.

Image 2: Price Development Road-Rail 1975 -2005


1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 19951975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995

Package Freight

Price per Km

int. Rate Deterioration

ex 01/90

nat. Rate Deterioration

ex 01/94

1997 1999 2001 2003 2005

1

2


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Despite of positive influence of private railways, the rail transport sector is still far

away from its increase of efficiency. Rail transport was affected drastically by falling

market shares. It was only able to defend itself with the high volume of its traditional

bulk business, especially against inland waterways. In the range of high-quality eco-

nomic goods the rail could not participate in the market expansion and market

shares got lost dramatically.

Only in the last couple of years the share of rail freight transport has increased a bit

in the range of high valuable goods, at least in Germany, where it has been decreas-

ing over the last 50 years (see Image 1).

Although the road transport sector reacted pro-actively to the liberalisation and in-creased its own process efficiency there is no sign of a corresponding pro-active

competitive process in the rail sector in spite of legally initiated liberalisation. It is

also the fact that the road transport market always was heavily oriented around mid-

size companies. The large numbers of competitors in the market left no other possi-

bility open other than to immediately adjust pro-actively to the changing market con-

ditions and individual customer needs.

Opposite to this we have and always had to deal with a monopoly through state

owned railways, who do not feel the intra-modal market pressure from beginning.

This shows an increasing fact, that a lot of state owned railways develop monopoly

strategies instead of adapting to the unavoidable competition, and look for discrimi-

nation tactics in the first place, such as:

Admission procedures as a railway company,

National partition of energy and communication systems,

Engergy-charges,

Admission rules for locomotives, especially for international use

Renaturation of railway tracks

etc


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Add to this, the liberalisation process in Europe is very different from each other, as

shown on the graphic below.

Image 3: Level of liberalisation of the rail market in Europe


While first noticeable successes are indicated in Germany, Benelux and Scandina-

via, it is more difficult to initiate a generous access on the particular railway networks

in the Romanic states.

Under this perspective it is very interesting to see in Germany that the growth in the

railways share of the modal split over the last 2 years has entirely been the result of

the private players. The German State Railways has lost a further 6% of tonnage be-

tween 2000 and 2004.

This sector exclusively claimed a repeated demand to increase the road tolls for

trucks to Swiss Level of approximately 0,70 per km, accentuated by a published

study of McKinsey. Background of this demand is the incorrect fact that the prevail-

ing divisions of the rail and road transports are in direct competition with each other,

with exception of bulk material transport. A high utilization of the roads will lead to

competition advantages for the rail and to accordingly higher market shares.

So far there was a frequent effort to gain influence in this competition by the rail-

ways, together with their trade unions and politics (usually under the seal of the envi-


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ronmental policy); e.g. in the discussion of internationalisation of external costs, in

order to raise the price of the entrance conditions for the road for the benefit of rail

transport.

For example following measures were adopted:

Adaption of route prices in rail transport (Bisection of route prices in Ger-

many)

Fees for the use of highways (Euro vignette, truck-tolls in Germany and Aus-

tria, LSVA [HVF fee for transit freight] in Switzerland)

Increase petroleum taxes.

All these Efforts have failed their effect on the change in the modal split to railwaysbenefit, because road transport was always able to increase its attractivity to the

market. As a consequence the trend of modal split on the road continued, measured

by total traffic.

The McKinsey study shown above enumerates now, that an increase of tolls to about

0, 70 per km would help rail companies to increase their market share by up to 3

percentage points. This would be an increase from 14% - 15% today to 17% -

18%. According to statements of the chairmen of German and French railways Louis

Gallois (SNCF) and Hartmut Mehdorn (DB) this is the only way to save single wagon

traffic.

On one hand it is surprising, because in the past price increases in road transport

were used to increase the prices in rail transport in parallel. On the other hand dras-

tic toll increases, as suggested by the railway companies, signify a massive interven-

tion into the economical development of the forwarding market on the account of the

shippers.

Astonishing as well is the statement of the railway companies that the capacity of the

railway system is limited at present. To this point the subsidies would have to be in-

creased noticeably in order to extend the rail network so that a qualitatively high-

value railway system would remain preserved.

The rail network would, however, clearly be able to take additional traffic. If ad-

vanced electronic technology were introduced allowing operations with electronic

view, further capacities would be freed up. This type of technology is currently being

successfully used in urban commuter traffic systems.

By focussing on the capacities of the road, there are clear capacity bottlenecks in

congested urban areas, essentially in the rush-hours. A large part of the long dis-tance road transport which is exactly the traffic load that comes into question to be


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shifted to rail however takes place at night (night leap) due to the economical re-

quirements. During this time, the long distance road network is not only overbur-

dened, it even has extra capacity.

Ultimately a competitive price, a correspondingly required quality and a sufficient of-

ferwill decide the competition between success and failure of a forwarder within a

market economy.

The reason of the current study at this point was the previous development and the

fact that the railroads repeatedly try to improve their market position by increasing

road tolls, instead of further development their tender structures actively.

Following questions open up to be answered:

1. Is it right to increase road tolls in order to generate more traffic for rail transport?

2. If this is right, which quantities can then be generated for the rail at what road toll

price level? Or rewording the question: Which quantities react price-sensitively

to a corresponding road toll increase (price elasticity of the demand)? Answering

this vital question could be useful for comparison: what capacity (tonnages) can

be reached then over the further development of the propositions of the rail pro-

viders (improvement of the cost effectiveness)? How high should the toll charge

be at the end?

3. What effect would a toll have on the economy for this purpose?

The IRU and the BGL delegated TransCare, a competent consultancy in rail traffic,

with this project. TransCare accomplished more than 300 consultation projects in the

rail transport sector within the last 13 years, both for the providers side (state owned

railways and private railways) as well as for the demand side (trade, industry and

shipping), as for instance Rail4Chem for BASF AG or Seehafen-Hinterlandverkehre

for HHLA AG.

That way TransCare successfully managed to shift road transport to rail in many pro-

jects. Last but not least the majority stockholder and chairman of the board of Tran-

sCare has been the managing director of the largest European intra-modal company,

Kombiverkehr KG, in the past.


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2 Analysis Status Quo Tolls in Europe

First of all the point is to examine how the modal split between road and rail devel-

oped in the past in those countries, were road tolls are collected. Altogether 27

European countries collect fees for the use of highways for trucks.

There are three types of tolls to set apart.

A time dependent toll, which is paid as lump sum over a fixed period (e.g.

monthly, yearly).

A toll system dependent on travel distance.

Geographically restricted toll systems, mostly for agglomerations.

An additional criterion for the toll calculation is the pollutant category of the truck. In

many cases the toll is limited to certain roads(France, Germany) or is been charged

only on special routes, e.g. the "Brenner" highway in Austria, bridges or tunnels.

The amount to be paid per kilometre in Europe differs enormously between 0.01 in

Turkey and 0.74 in Switzerland.

The following describes different toll systems and their influence on the modal split.

With Germany, France and Switzerland 3 exemplary countries were selected, thatare adapted representatively for a later extrapolation on Europe (EU 25) for the fol-

lowing reasons:

Tolls have been charged for differing lengths of time, allowing short, middle

and long term effects to be observed.

The average toll varies considerably from on another in the focused countries.

Important conclusions can be drawn regarding the relation between the level

of the charged toll and modal shift tendencies, if required.

Another common aspect is that all 3 countries possess of an area-wide highquality rail track network.

The analysed countries seem to be very progressive in their efforts at interna-

tionalisation and supply-oriented policy and would therefore have to be par-

ticularly successful in the required increase in road costs.

An extrapolation of these countries on the rest of Europe (EU 25) turns out to

be in favour of the rail and so far fall out optimistically.


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2.1 Road Tolls in Germany

The road toll in Germany is a so called Free-Flow-System, where the toll is collected

automatically without the necessity of a stop at a toll collect station. The amount of

the toll is determined according to the cost-by-cause principle, which is simplified

quite a bit and therefore charged arbitrarily. So each truck with a permitted total

weight of at least 12 t pays a average rate of 12.4 cents per km (scale from 9 to 14

Cents depending on pollutant category and number of axis) while all lighter vehicles

can travel free of charge.

After the technical initial difficulties (incorrect billing during the test phase, faulty on

board units, too few OBU and untrained workshops), now from technical point of

view, the system is operating well since 1st January 2005 according to the vast ma-

jority of the forwarders, according to statements of BMVBS.

According to the final report of the federate consortium, Modal Shift as a result of

truck tolls, a shift to the road will not lead to cost savings in 97% of the cases.

Image 4: Modal Split in Germany [Bill. tkm]

Source 4: Kraftfahrt-Bundesamt, Statistisches Bundesamt und BVU Prognose, Progtrans,Illustration TransCare

Performance Road and Rail in Germany

341,7 346,3 353 349,3365,8

383,6 394,0405,8

436,7

70,984 76,815 74,523 72,422 79,886,4 89,3 91,7 98,1

0

50

100

150

200

250

300

350

400

450

500

1999 2000 2001 2002 2003 2004 2005 2006 2009

1.0

00M

io.

tkm

goods transported by road goods transported by rail


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TransCare AG 13

The development curve in image 4 shows very clearly that at least one of the main

political intention the transfer of freight traffic from road to rail - has not been

reached, although the liberalization process is comparatively further advanced in

Germany.

On the other hand Deutsche Bahn AG (DB AG) increased their fees in their core

segments simultaneously when the toll system got implemented in the beginning of

2005. With this strategy DB AG was able to improve its margin in the combined traf-

fic. Moreover the image also points out that even until 2009 there will be no im-

provement on the modal split for the benefit of the rail.

2.2 Road Tolls in France

In France, tolls are charged for every vehicle on all highways. The highway which

leads to the Massif Central (Clermont-Ferrand - Montpellier) is toll free for the most

part. Highways which pass through congested areas or stretches of highways which

pass large cities are toll-free, as well. (E.g.: Paris, Bordeaux, Lyon, and Montpellier).

The toll is collected at fixed toll booths by personnel or by coin machines the toll

amount depends on the travel distance and type of vehicle. Moreover the amount

also depends on the total costs that arose during the construction period of the road.

Frequent drivers can acquire a subscription.Today there are eleven different operators for the ca. 11,000 kilometre stretched

network. Some individual roads are still government property; however they will be

privatized gradually.

The trucks classified in the category III pay per kilometre travelled on the highway

between 0.14 and 0.19 . This toll system is in operation for several decades al-

ready.

Image 5 shows very clearly that a transferral effect is not to be diverted through thetoll. That modal split organizes itself in France very similar like in Germany, with ca.

78% road- and 14% rail transport, related to the efficiency in ton/kilometres (t km).

In comparison with Germany, the liberalization of the rail traffic in France hardly pro-

gressed yet. In fact the state owned railway SNCF has an absolute monopoly in this

sector. Merely 3 licenses are given for rail transport in France at present. Germany

has more than 200 rail freight companies, of which only about 20 operators to be

taken seriously.


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Performance Road and Rail in France

260,3 266,5273,7 277,2

50,396 50,036 46,83555,35253,438

0

50

100

150

200

250

300

1999 2000 2001 2002 2003

1.0

00Mio.

tkm


Image 5: Modal Split in France [Bill. tkm]

Source 5: EU-Commission Directorate-General for Energy and Transport, Illustration TransCare

2.3 Road Tolls in Switzerland

An electronic toll system for transport vehicles is in use on all roads in Switzerland

and Liechtenstein. On January 1st 2001 an electronically collected, distance-based

toll for trucks of over 3.5 tons went into effect, the so-called Heavy Vehicle Fee

(HVF). The toll ranges from 0.05 0.74 per km depending upon vehicle size and

the route travelled. A typical transport truck with a gross vehicle weight of 40t pays

an average of 0.70 per km.

An additional fee is collected for specific structures and some of the tunnels on the

Italian border, such as the Sankt Bernhard Tunnel, for example.

Not only did Switzerland introduce the HVF, but at the same time they introduced an

integrated package designed to transfer traffic from the roads to the rails. The initial

target is to stabilize the number of transport vehicles on the roads and then to effect

a sustainable reduction of that number over the coming years. The following meas-

ures were taken:


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TransCare AG 15

Supplementary measures aimed at reducing road transport or transferring it

to neighbour states

Reimbursement of the LSVA-toll for transport to and from intermodal termi-

nals

Step-by-step increase of the permitted gross weight of vehicles from 28 t to

40t

Consistent modernisation of the railway infrastructure

Infrastructure fee reduction in rail transport

Image 6: Modal Split in Switzerland [Bill. tkm]

Source 6: LITRA, Switzerland 2005, Il lustration TransCare

These measures strengthened combined transport in Switzerland while wagon-load

transport continued to lose market shares. Illustration 6 clearly shows the results in-sofar as the sum of the wagon-load and combined transport in total rail freight ser-

vices has not led to any increase in market share. Estimates of the Federal Office for

Spatial Development assume that a maximum of 40% of the transferral effects in fa-

vour of combined transport arise from the Heavy Vehicle Fee. [Federal Office for

Spatial Development, Bern, November 2004]. Almost the same amount has been

covered by the higher truck weights. However, experts (Hupac, TransCare), quote

that the changes in Hupac's purchasing policy through offers using multiple fre-

quency locomotives - especially achieved through competition between state andprivate railway tenders - are responsible for most of the increase in combined trans-

port.

Performance Road and Rail in Switzerland

20,48722,403 22,656

23,83421,950

10,11510,33710,88110,8609,831

0

5

10

15

20

25

30

1999 2000 2001 2002 2003

1.0

00Mio.

tkm



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TransCare AG 16

Remarkably, in spite of this enormous increase in costs road freight transport has

grown disproportionately to rail freight transport and has even increased its market

share. This is especially true considering that the high toll costs have forced a no-

ticeable number of trucks to use alternative routes through Austria and France.

This example demonstrates just how little influence a truck transport toll has on

changes to the modal split. In spite of a toll six times higher than Germany's is today,

these measures were only able to generate a marginal transfer potential for rail

transport. The overall Swiss rail freight transport actually even decreased slightly

from 2000 to 2003. Combined transport, where additional measures were taken, was

the only sector to evince continuous growth.

Obviously rail transport profits more from a free market supply-oriented policy with

an attractive cost-performance ratio than from high road toll fees.


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TransCare AG 17

2.4 EU 25

In the following text it should become in addition to the qualitative explanations in

the introduction to this chapter - quantitatively clear that a projection using France

and Germany as substitutional representatives is permissible.

Image 7: Modal Split [t km, %], Note: Road - t km by vehicles registered in the country

Source 7: EU-Commission Directorate-General for Energy and Transport, Presentation TransCare

Image 7 shows a road freight transport volume of 1,554 billion t km in 2002. A total of

637 billion t km were transported in Germany (359.8) and France (277.2) or by vehi-

cles registered there (see illustrations 4 and 5). This represents a 40.9% share of

the total road freight transport volume within the EU member countries (EU 25).

In addition, image 8 clearly shows that the rail modal splits in Germany and Francein 2002 are the same as those for EU 25:

Rail Share Germany 14.8%

Rail Share France 14.3%

Rail Share EU 25 16.4%

Performance Road and Rail EU 25

1 231 1 313

1 382 1 4351 486 1 516

1 554

359 378 369 357 374 358 354

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

1995 1997 1998 1999 2000 2001 2002

1.0

00Mio.

tkm



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TransCare AG 18

Image 8: EU 25 Modal Split [%]

Source 8: EU-Commission Directorate-General for Energy and Transport, Illustration TransCare

This will allow the volume of road freight transport available for a modal-shift to rail

transport to be calculated in chapter 3 based on the detailed studies of Germany and

France and then extrapolated correspondingly for the entire EU.

2.5 Cost Efficiency and Transport Political Conditions

In the middle of the 90ies the transportation ministries of Austria and Switzerland

looked into the competitive conditions of road and rail carriers very intensively. Ob-

jective was to find out, which transport policy could actually lead rail transportation to

more competitiveness with the road. In this project TransCare was assigned to re-

view 10 transport political parameters regarding their effectiveness on the improve-ment of competitiveness of the rail. This was evaluated on the basis of 6 statistically

Modal Split EU 25 - 2000

Road 70,4

Inland Water-

ways 6,2

Pipelines 5,6

Rail 17,7

Modal Split EU 25 - 2002

Road 72,0

Inland Water-

ways 6,0

Pipelines 5,6

Rail 16,4


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TransCare AG 19

representative cases in the "Alps-Transit", where each of the political measures were

valued monetarily compared with the resulting door-to-door costs in road transpor-

tation and the unattended combined traffic. The costs basis regarding road and rail

was updated for 2005. The advance and subsequent costs as well as the handling

costs per total distance are apportioned door-to-door in the rail sector.

The traffic political measures were segmented as follows:

1) Measures that do not cost anything but generate competition

- total liberalization

- separation of rail network and operations

- harmonization of the energy prices for state and private railways- etc.

2) Tax additives and subventions for combined traffic, e.g.

- capital investment for terminals

- sponsoring of equipment for combined traffic

- etc.

3) Rise in road prices, e.g.

- tolls and taxes

- social policy controls,

- Night driving bans

- etc.


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TransCare AG 20

cost level 2005 per km

1,50

- 0,36

- 0,09

1,05 1,00

+ 0,17

1,17

Rail Road

1)

3)

1,50

- 0,36

- 0,09

1,05 1,00

+ 0,17

1,17

Rail Road

1)

3)

Image 9: Measures and Ranking

Source 9: TransCare (1995-97)

The result of this study which exists since 1997 validates the actual situation in Swit-

zerland, as shown in Chapter 2.3.

With regards to the improvement of the competition position in rail and road, the

generation of persistent competition in the rail sector has highest effect so far.


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TransCare AG 21

3 Modal Shift Potential Road-Rail

This chapter will determine the percentage of road freight transport volume which

can potentially be won for rail transport. The initial focus is on the total carrier vol-

ume in road transport. This volume is to be reduced in logical steps on the basis of

categories of goods, their average distances and specific logistical requirements

with regards to modal-shift capability.

Image 10: Procedure to evaluation of relocatable potentialities of the road transport.


Total Volume of Goods Transported by Road by Type of Goods (3.1)

- Not rail feasible share of volume

= Rail feasible volume transported by road (3.2)Share with too short transport distance

= Rail affine volume transported by road (3.3)

- Share of containerisable volumes, where use of an inter-modal transport system

offers no economical justification (ratio road-based pre- and on-carriage to rail-

based main carriage)

- Share with low quality offers

= Modal shift potential for rail (3.4)

Total volume of goods transported by road (by type of goods)

Volume not suitable for rail transport (questioning of experts)

too short transport distance

economically no justifiable access

to intermodal transport

low quality offers

Volume transferable

by price

Total volume of goods transported by road (by type of goods)

Volume not suitable for rail transport (questioning of experts)

too short transport distance

economically no justifiable access

to intermodal transport

low quality offers

Volume transferable

by price


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TransCare AG 22

First of all those quantities which cannot be shifted to rail are segmented and sub-

tracted. The result of this calculation is the total quantity relocatable due to price

compensations and therewith price sensitive volumes in equally remaining quality of

the rail.

3.1 Total Volume of Goods Transported by Road (by Type of Goods)

According to the statistics the total goods transported by road consists of the follow-

ing quantities:

France: 2,076,705,000 t

Germany : 2,727,900,000 t,

Total 4,804,605,000 t.

According to experiences of the past 30 years along with the current experiences in

Switzerland it is obvious that the fundamental approaches to relocate the road trans-

port to rail can only be insisted through combined traffic. As a positive fact of the

combined traffic high losses in the conventional rail transport were compensated in

the past 20 years. Especially in that single wagon transport losses were at least in

partly compensated so that the rail could nearly keep up with the percentage in-

crease of the road.

3.2 Rail Feasible Volume of Goods Transported by Road

Several projects were accomplished in Germany during the nineties already where

potentials for the rail and especially for the combined traffic were analysed. Upfront

container capable potentials were determined through an expert inquiry on basis of

the cargo groups. Following companies/institutions were involved in this expert s sur-

vey.

Kombiverkehr GmbH & Co. KG, Frankfurt/M.

Association for combined traffic, Frankfurt/M.

TransCare AG, Wiesbaden

The measurements in image 11 clearly illustrate, that high value goods (vehicles,

machines, finished and semi-finished goods) show the highest affinity in combined

traffic, while other goods like coal, ores, stones and soil have little or no potential.


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TransCare AG 23

Volumina D

Road Transp.

[t]

Containerisation

Level of

KeyProducts KT-affin

Volumina F

Road Transp.

[t]

Containerisation

Level of

KeyProducts KT-affin

Agriculture and Forestry 141.000.000 25% 35.250.000 63.223.000 25% 15.805.750

Food and Animal Feed 304.000.000 35% 106.400.000 364.892.000 35% 127.712.200

Coal 12.300.000 0% 0 6.655.000 0% 0

Mineral Oil and Oil Produce 105.100.000 37% 38.887.000 85.508.000 37% 31.637.960

Ores and Scrap Metal 28.600.000 10% 2.860.000 41.832.000 10% 4.183.200

Steel, Metal and Non-ferrous Metals 72.100.000 35% 25.235.000 39.657.000 35% 13.879.950

Stones and Soils 1.361.100.000 15% 204.165.000 941.487.000 15% 141.223.050

Fertilisers 20.000.000 30% 6.000.000 48.384.000 30% 14.515.200

Chemical Products 209.600.000 63% 132.048.000 45.891.000 63% 28.911.330

Vehicles, Mashines, Finished and

Semi-Finished Goods 474.100.000 68% 322.388.000 439.176.000 68% 298.639.680

Total 2.727.900.000 873.233.000 2.076.705.000 676.508.320

Image 11: Modal Shift Volume Road-Rail


The share of freight suitable for rail transport, depending on the classification of

goods and their characteristics (size, quantity, time, etc.) was calculated in the fol-

lowing tonnages:

France: 676,508,000 t

Germany: 873,233,000 t,

Total 1,549,741,000 t or 38.7%.

After the first modal-shift review round about 40% of the total road transport is avail-

able in volume and capable for rail transport. This builds a solid basis for the next

move.

3.3 Rail Affine Volume of Goods Transported by Road

The volume calculated by type of goods which amounts to 1.55 billion t shows a

varying affinity for inter-modal transport depending on the transport distance. Short

distance transports not transferable and therefore not rail affine. So far the transfer-

able volume of goods determined here on the order of 1.55 billion t shows a differ-

ence in affinity to the combined traffic dependent upon the carrier distances. The fol-

lowing assumptions were made:

0 100km 0%

100 250km 10%

250 500km 50%

> 500km 100%


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Based on statistical data about the average transported distances for the different

types of goods (see Annex 1), the following rail affine volume was calculated:

France: 85,530,000 t

Germany 110,401,000 t,In total 195,931,000 t or 4.1%.

3.4 Modal Shift-Potentials

A total of 196 million t in France and Germany or just up to 4% of the total road

freight tonnage could be transferred to rail based on the characteristics of the goods

and the transport distance. This outlines a fundamental for evaluation of the price -

sensible volume.

Based on an estimated average distance of 292 km* the transferable transport per-

formance in Germany and France amounts to 57.1 billion tkm Presently the German

and French railways transport 436 million t. As a consequence of this, a complete

transfer of the volumes and performance mentioned above mean an increase of:

Tonnage 436 million t: 44.7% Transport performance 133.2 billion tkm: 42.9%

The 196 million t calculated can not be taken as potential that can be shifted by a

simple increase in the cost of road transport. TransCare processed more than 300

projects, where it was considered to keep the volume of goods preserved for shifting

to rail. It became clear that winning rail affine quantities is achievable only by definite

improvements of the services offered on the rail.However the following quantities

should be further subtracted: Quantities not economically justifiably for inter-modal transport:

35%

Quantities with time requirements which cannot be met by rail: 25%

Quantities with special requirements (temperature control, multiple delivery

points, etc.) currently are not offered by rail operators 10%

The 196 million t mentioned is therefore only roughly 30% price sensitive. This

means that even reducing the rail prices to 50% of the present level, at the present

quality level, 70% of this volume would not be shifted to rail.


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On the other hand an increase in the cost of road freight transport would mean that

in

France 25.659.000 t

Germany 33.120.300 t,consequently max. 58.779.300 t or 1.22%

would react to these prices and will therefore be shifted to rail.

If the gain is calculated using the example of Germany with current 310 million t on

rail (see image 12), the volume increases itself at about only 11%. The market share

(not the efficiency in t km) would increase by 1.08 percent-points to 11.29% at the

tonnage.

Image 12: Modal Shift-Potential for the Rail


3.5 Interim-Result

The total transfer potential created by political pricing (fiscal measures) amounts to a

maximum of 1.22% (58.8 million t) of the goods transported by road.

However, this potential can only be achieved if

the cost of transport constitutes a high proportion of the total supply-chain costs

and the cost of freight transport by road is being increased overall.

On the other hand, the total potential for transfer of transports created by improve-

ments in rail quality amounts to 4.1% of the road freight.

However, this potential can only be achieved if

the potential increase of efficiency driven by the increasing intra-modal

competition is reflected in the prices

and the quality of the performance offered is considerably improved.

Modal Split by the example Germany

Status Quo Case Study (1/km Toll)

Road 2,727 mil. t Road 2,694 mil. t

Rail 310 mil. t (10,21%) Rail 343 mil. t (11,29%)3,037 mil. t 3,037 mil. t


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4 Determination ofModal-Shift-Capable Toll Amount

After clarifying the fact that the potential on the order of 58.8 million t can only be

achieved by increasing the price of the street, it is now essential to calculate the

amount of the toll, so that the modal shift capable volume reacts to use the rail . Ini-

tially today's road and rail infrastructure fees will be examined in order to determine

whether there is a comprehensible relationship between the two from a business

management standpoint or whether the road use costs are too low.

4.1 Infrastructure fees

The following Image 13 illustrates the determined infrastructure fees per truck for

the road and combined traffic with the example of Germany . As a comparison rail

transport with diesel locomotives was underlied, in order to be able to charge both

transits with the adequate mineral oil tax. The costs for using the rail would have

been a bit lower by using electrical locomotives, which are generally used in com-

bined traffic.

The route prices for rail transport are collected per covered kilometre in Germany

and the rest of Europe and can therefore be carried over on a per-truck basis. The

usual break-even calculation model based on a train length of 600 m running at 66%

of capacity was used. Based on this a train would transport approximately 20 truck-

suited transport units.

0.24Cost per truck unit0.32Cost per truck unit

0.03% Fuel Tax to and from Terminal0.18Fuel Tax

0.06Fuel Tax Equivalent0.02Vehicle Tax

0.15Standard Track Price0.12Toll

Infrastructure Fees - Combined Traffic

per Truck

(1 Locomotive, 2/3 utilization rate = 20 trucks)

Infrastructure Fees -

Road

(per km/truck)

0.24Cost per truck unit0.32Cost per truck unit

0.03% Fuel Tax to and from Terminal0.18Fuel Tax

0.06Fuel Tax Equivalent0.02Vehicle Tax

0.15Standard Track Price0.12Toll

Infrastructure Fees - Combined Traffic

per Truck

(1 Locomotive, 2/3 utilization rate = 20 trucks)

Infrastructure Fees -

Road

(per km/truck)

Image 13: Infrastructure Fees Road vs. Combined Traffic


The result in Image 13 illustrates that the use of the road is even more expensive by

25% than the costs using the infrastructure of the combined traffic.


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4.2 Price Sensitivity

The previously determined modal shift potential of road freight transport of 58.8 mil-

lion t consists mainly of high priced and at the same time small sized goods over

longer distances. The potential in the other sectors, here shown grey, should be dis-

regarded.

Only minor part by railBy rail/inland waterways

By roadMainly by rail

Only minor part by railBy rail/inland waterways

By roadMainly by railhigh priced

low priced

heavy load/large quantities small sizes/quantities

Image 14: Price-Sensitivity of goods


In the following the transport costs are shown as a proportion of the total logistics

costs. From this it can finally be concluded how far an increase of transportation

costs would effect the total costs of the supply chain. Furthermore it can clearly be

seen how high the toll increase would have to be in order to cause a modal shift.


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The modal shift potentials were classified into following logistical segments.

Parcel

Parcel solution: collection reloading transport reloading delivery

Parcel price in Europe ca. 6 , of which freight 10%

Shared pallet

Pallet solution: collection reloading transport reloading delivery

Pallet price in Europe ca. 60 , of which freight: 20%

Full pallet

Pallet solution: collection reloading transport reloading delivery


Part load

LTL*-solution: collection - load additional cargo transport - part off-load - delivery


Full load

FTL*-solution: collection by road - transport by rail - delivery by road

Proportion of transport cost in the turnaround

costs incl. loading time 75%

It becomes clear that cost increases in the pure road transport have very different

effects on the affected supply chain. The sensitivity of the single logistics structures

will be very different in this respect. It is thereby supposed that with a cost increase

by 10% on the complete supply chain, alternative means of transport will be taken

into consideration.

Image 15 recapitulates by showing that the higher the quality of the market segment

the lower the affinity to change over to rail with simultaneously increased costs on

the road. Especially high quality segments like piece goods, package freight and pal-

lets appear as high prised segments as well along with the corresponding marginal

capacity for the forwarder. Exactly one of these segments (packages) reacts how-

ever to a cost increase of the road only if an additional toll of 1 per km is charged

on all roads and for all types of trucks. Piece goods react on an increase by 0.50 at

the earliest. Therewith the determined price sensitive modal shift-potential of 58.8

million t can only be reached entirely, if the prices on the road are increased by

around 1 per km.

* FTL = full truck load

LTL = less than truck load


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75%56,3%37,5%18,8%75%Full load

50%37,5%25,0%12,5%50%Part load

30%22,5%15,0%7,5%30%Full pallet

20%15,0%10,0%5,0%20%Shared pallet

10%7,5%5,0%2,5%10%Package

1.0 =

100%

0.75 =

75,0%

0.50 =

50%

0.25 =

25%

Share of

transport

costs

Cost Increase

Road

Cost Influence

Supply Chain

75%56,3%37,5%18,8%75%Full load

50%37,5%25,0%12,5%50%Part load

30%22,5%15,0%7,5%30%Full pallet

20%15,0%10,0%5,0%20%Shared pallet

10%7,5%5,0%2,5%10%Package

1.0 =

100%

0.75 =

75,0%

0.50 =

50%

0.25 =

25%

Share of

transport

costs

Cost Increase

Road

Cost Influence

Supply Chain

Effective cost increase

of process

> 10% of volumes

will be shifted

Image 15: Effective raise of processing costs


Such an amount will have a massive effect on the marked as well as on the affected

economies.

5 Effect on national economies

A drastic increase of road transportation will bring two potential effects. On hand the

cost increase on the road would be passed on to the shippers and consequently ap-portioned to the goods to be transported. This will inevitably lead to price increases

without added value and to inflation. On the other hand the economy could compen-

sate the additional costs which would lead to minor margins and a decrease of com-

petition lately. Both effects are illustrated in the following.

5.1 Increase of Operational Incosts through Truck Tolls

Overall 4.8 billion tonnes are transported on the road in Germany and France. A to-tal of 50 billion km are travelled by Trucks. An increase of the toll by 1 per km

would cause a surplus load of additional expenses on the order of 50 billion per

year. 2004 the GDP in Germany was at 2.21 billion and 1.65 billion in France,

3.86 billion in total. A cost increase on road freight transport will cause a increas-

ing of operational costs. As shown in illustration 16, this calculation has been per-

formed for all important European countries, whereby the operational incosts arising

from a toll charge of that magnitude could run as high as 8.5% (Slovakia).


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TransCare AG 30

Image 16: Increase of operational incosts


An increase of the toll on the value of 1 will cause economical total cost increasing

in the magnitude of 1.6% - an enormous economic burden.

5.2 Economical Effects

Apart from the increasing of the economical total cost, further negative effects are to

be expected, if the toll will be increased:

Decline in Europes attractiveness as a logistics centre in the global

network

Increase of production costs

On the one hand, a price increase:

- population will carry a big part of the additional costs caused by

the increased toll fees

- weakening of the domestic economic situation and the resulting

dampening of the growth rates

- weak economic growth means an increase in unemployment


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On the other hand, a proportion of the increased costs would be com-

pensated inside the economic cycle, as they can not be projected onto

the global market. This would, in turn, lower the already low profitability

in the European commercial economy. The result would be

- A reduction of over 50% in the return on turnover in I, GB, F,

DK, A and D

- Bankruptcies

- Loss of employment

Comparison

operation margin - increasing of operational incosts

-1

0

1

2

3

4

5

6

7

8

E CH IRL B FIN NL S I GB F DK A D

Percentage

operating margin increasing of operational incosts

Image 17: Operating Margin vs. Increase of Operational Incosts

Source 17: Institut der Deutschen Wirtschaft (IW), Kln, Darstellung TransCare

A decline of the operating margin in such a way will cause an additional enormousshift of production and jobs to non-European countries.


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6 Result and Summary

The existing survey pays very close attention to appeal of the state railways to in-

crease the costs of the road by increasing tolls. According to the railways opinion

the modal split could be improved in favour for the rail. The increase of the toll in

Europe demanded by the European railway companies comes to 0.60 .

This unique study shows, pragmatically as well as statistically documented, that a

toll increase as demanded will have no measurable transfer effects!

1. The modal shift potential created by pricing and without increasing quality of rail

transport is limited to 1.22% of the current volume transported by truck.

2. This modal shift potential (1.22% or 58.8 million t) could only be achieved through

an increase of the toll to a value of 1 per truck-km on all roads.

3. It is still uncertain, if the improvement of the competitive environment has been

used by the railways. However price increases in road transport were used to in-

crease the prices in rail transport in parallel in the past, without using the possible

competitive advantage to the generation of more traffic.

4. The effects of a toll increase of this magnitude on the national and businesseconomies are severe. The operational incosts will cause an increase of 1.6% with a

concerning pressure of inflation. As if the global competition avoids fiscal-cost-

increases, this causes a bisection of the margins of the commercial economy in the

biggest European economies. This effects insolvencies, reduces growth of econo-

mies and increases the unemployment.

5. Drastically increased road tolls would be create a location disadvantage with the

accompanying weakening of the European position in global competition. A highprice to pay for a small increase in rail transport.

6. A modal shift from road to rail will not be achieved by weakening road traffic

through high pricing.

7. Contrary to this a shift from road to rail of up to 4.1% could be achieved by im-

proving the quality and structures in rail freight transport. And this would be an in-

crease of rail freight of approx. 196 million t or 40%!


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Transfer of traceable quantities to rail can only be achieved by target oriented

improvements in the offers of rail freight transport. The management of the railways

should be concerned about their essentially available chances and potentials, in-

stead of stressing the efficient competition of the road as a disadvantage for the

economy. Private railway companies already show on some examples, e.g. Hinter-

land traffic, how efficient the rail can be.

transcare - influence of truck tolls on the modal split in cargo traffic

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